Today was a such a great day with a fantastic result this morning!
Let me set the scene:
I met a young couple recently that wanted to buy their first home. They had seen a property that they wanted to buy and make home, but had no idea where to start with their finances. The agent very kindly introduced them to me.
They had been doing the right thing and saved enough to pay the deposit and costs. When we sat down in their front room and went through their situation, it appeared at 1st glance that this was a deal! The next day they put in an offer on the property and much to their surprise they were accepted. This was fantastic news when I got the call and I got to work getting the application into the lenders system, but the joy was short lived as it was instantly knocked back by their credit scoring engine. This was very upsetting for the young couple, but I explained to them that this is not the end of the road, every lender is different when it comes to credit scoring.
When you apply to a lender, they take all of the information that you add into the application and they apply a score to it. The smaller the deposit that you are putting towards the purchase, the higher that score needs to be as the risk to the bank grows. The bank is looking for stability. For example, if you have been moving from employer to employer several times over the last 3 years, then they may score that part of the application low. By the same token, if you have lived at the same address for 3 years or more, they may score that part high. If you have multiple credit enquiries on your credit file, they will give you a lower score etc etc. they will add up all the scores and you need to meet whatever the score they have in the background of the application. What that score needs to be really depends on the lenders appetite for the type of business you are presenting at any one time. They can adjust the score card in the engine anytime they want to increase the flow of business or reduce the flow of business. There is no one way to know exactly what you are going to score.
Back to our couple; we quickly packaged up another application to a different lender, and had it submitted at the start of this week, same deal, different lender and the application sailed through without an issue! I had the privilege of delivering the news this morning that their loan was unconditionally approved, I could hear the relief and excitement coming down the phone. What an awesome feeling, it really was the BEST news to deliver! I hope that they are out there this Friday evening celebrating this very exciting start to the next chapter of their lives, home ownership – things just got real!
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